Principal Commissioner Of Income Tax, Central 2 v. M/S.ennore Cargo Container Terminal P. Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.03.2017 CORAM : The Hon'ble MR.JUSTICE RAJIV SHAKDHER ANDThe Hon'ble MR.JUSTICE R.SURESH KUMAR T.C (A) Nos.105 and 106 of 2017 Principal Commissioner of Income Tax, Central 2, No.108, Mahatma Gandhi Road, Chennai 600 034... Appellant in bothTCAs. -vs- M/s.Ennore Cargo Container Terminal P. Ltd., No.144, Valluvar Village,Kondakarai, SR Palayam,Chennai 600 120... Respondent in both TCAs. Appeals filed under Section 260A of the Income-tax Act,1961, against the common order dated 12.05.2016 passed inI.T.A.Nos. 41/Mds/2016 and 42/Mds/2016 by the Income TaxAppellate Tribunal Madras 'D' Bench, for the Assessment Years2007-08 and 2010-11 respectively preferred against order inI.T.A. Nos.666 & 667/2013-2014 dated 19.09.2014 passed by thecommissioner of Income – Tax (Appeals) – III, Chennai, andagainst the Assessment order dated 31.03.2013 made inPAN.No.AABCE 4546 na on the file of the Assistant Commissionerof Income Tax Company Circle II (i), Chennai, for the year 2007-2008 & 2010-2011. COMMON JUDGMENT (Judgment of the Court was delivered by Rajiv Shakdher, J.) 1.These are the appeals preferred by the Revenue against thecommon order of the Income Tax Appellate Tribunal, Madras 'D'Bench (in short 'the Tribunal'), dated 12.05.2016. The appeals https://hcservices.ecourts.gov.in/hcservices/ pertain to Assessment Years (AYs) 2007-08 and 2010-11respectively. 2.Qua the captioned appeals, the Revenue has framed thefollowing questions of law for consideration by this Court inrespect of the aforementioned AYs: For the Asst. Years : 2007-08 & 2010-11: i. Whether the Tribunal is correct in allowing deductionu/s. 80IA(4) on ''Container Freight Station'' evenafter the amendment to Section 80IA(4) wherebyExplanation was introduced w.e.f. 01.04.2002 hadomitted the word ''any other public facility ofsimilar nature''?ii.Whether the Appellate Tribunal is correct when theassessee had not developed the ''infrastructurefacilities'' as it was only a custodian for themovement and handling of all containerizedimport/export consignment in Container Freight Station? iii.Whether the Appellate Tribunal is correct in holdingthat deemed dividend has to be assessed only in thehands of the registered shareholders for whosebenefit, the money was advanced ?iv.Whether Appellate Tribunal is correct in deleting theaddition made towards deemed dividend on the groundthat the assessee is not a registered shareholder ofM/s.Indev Logistics Pvt. Ltd. from whom advance wasreceived by the assesee-company for the benefit of theshareholders who are also the common shareholders,holding more than 10% of shares, in assessee-companyas well as in M/s.Indev Logistics P. Ltd. ?'' 3.Mr.Sridhar, who appears on behalf of the assessee, saysthat insofar as Question Nos.1 and 2 are concerned, which arecommon to AYs.2007-08 and 2010-11, they are covered by thejudgment delivered by the Division Bench of this Court in thecase of Commissioner of Income Tax vs. A.L.Logistics Pvt.Ltd., (2015) 374 ITR 609 (Mad.), and the judgment in the case ofCommissioner of Income Tax vs. AL Logistics P. Ltd., (2016) 96CCH 45 ChenHC. 3.1.As would be evident, the aforementioned judgmentspertain to the same assessee, albeit, for different AssessmentYears. Furthermore, a perusal of the aforementioned judgmentswould show that they have followed the view taken by the DelhiHigh Court in the matter of Container Corporation of India Ltd.,vs. ACIT, (2012) 346 ITR 140 (Del.). https://hcservices.ecourts.gov.in/hcservices/ 3.1.As would be evident, the aforementioned judgmentspertain to the same assessee, albeit, for different AssessmentYears. Furthermore, a perusal of the aforementioned judgmentswould show that they have followed the view taken by the DelhiHigh Court in the matter of Container Corporation of India Ltd.,vs. ACIT, (2012) 346 ITR 140 (Del.). https://hcservices.ecourts.gov.in/hcservices/ 3.2.Mr.Senthil Kumar, who appears for the Revenue, says thatinsofar as the judgment of the Delhi High Court in the case ofContainer Corporation of India Ltd. is concerned, the matter wascarried to the Supreme Court by way of a Special Leave Petition,which has been admitted and numbered. The learned counsel saysthat the appeal has been accorded the number: C.A.8900 of 2012. 3.3.Having regard to the aforesaid, we are of the view thatthe captioned appeals by the Revenue qua Question Nos.1 and 2cannot be admitted. The two Division Benches of this Court haverejected the Revenue's appeals with regard to the similarquestions of law. It is ordered accordingly. 4.Insofar as Question Nos.3 and 4 are concerned, thefollowing brief facts are required to be noticed: 4.1.The assessee-company, evidently, received a capitaladvance in a sum of Rs.1,09,50,000/- from an entity by the nameof Indev Logistics Pvt. Ltd. The assessee-company as well asthe said entity, i.e.Indev Logistics Pvt. Ltd., admittedly havecommon shareholders. The shares in the assessee-company to theextent of 50% are held by Mr.Xavier Britto, while the balanceshares are held by Smt.Vimalarani Britto. In so far as IndevLogistics Pvt. Ltd. is concerned, shares are held likewise bythe said individuals, though in a different ratio. Mr.XavierBritto holds 60% of the shares in Indev Logistics Pvt. Ltd.,while Smt.Vimalarani Britto holds the balance 40% shares in thesaid entity. 4.2.The Revenue seeks to assess as income the capitaladvance received by the assessee-company from Indev LogisticsPvt. Ltd. on the ground that it is deemed dividend received bythe assessee-company for the benefit of the registeredshareholder. For this purpose, the provisions of Section 2 (22)(e) of the Income-tax Act, 1961 (in short 'the Act') is soughtto be relied upon. The Tribunal has rejected the saidcontention of the Revenue, principally, on the ground thatdeemed dividend can only be assessed in the hands of theregistered shareholder for whose benefit the money was advanced. 4.3.As indicated above, there is no dispute that theassessee did receive capital advance from Indev Logistics Pvt.Ltd. There is also no dispute that there are commonshareholders both in the assessee-company and Indev LogisticsPvt. Ltd. Therefore, quite correctly, as noted by the Tribunal,though, the advance received by the assessee company may havebeen for the benefit of the aforementioned registeredshareholders, it could only be assessed in the hands of thoseregistered shareholders and not in the hands of the assseeee- company. 4.4.In our view, on a plain reading of the provisions ofSection 2 (22) (e) of the Act, no other conclusion can bereached. As a matter of fact, a Division Bench of this Court,in the case of Commissioner of Income Tax vs. Printwave ServicesP. Ltd., (2015) 373 ITR 665 (Mad.), has reached a somewhatsimilar conclusion. 5.Mr.Senthil Kumar, however, contends to the contrary andrelies upon the judgment of the Supreme Court in Gopal and Sons(HUF) vs. Commissioner of Income-tax, Kolkata-XI, (2017) 77taxmann.com 71 (SC). company. 4.4.In our view, on a plain reading of the provisions ofSection 2 (22) (e) of the Act, no other conclusion can bereached. As a matter of fact, a Division Bench of this Court,in the case of Commissioner of Income Tax vs. Printwave ServicesP. Ltd., (2015) 373 ITR 665 (Mad.), has reached a somewhatsimilar conclusion. 5.Mr.Senthil Kumar, however, contends to the contrary andrelies upon the judgment of the Supreme Court in Gopal and Sons(HUF) vs. Commissioner of Income-tax, Kolkata-XI, (2017) 77taxmann.com 71 (SC). 5.1.In our view, the question of law considered by theSupreme Court in the case of Gopal and Sons (supra) wasdifferent from the issue which arises in the present matter.The question of law which the Supreme Court was called upon toconsider was whether loans and advances received by a HUF couldbe deemed as a dividend within the meaning of Section 2(22)(e)of the Act. The assessee in that case was the HUF and thepayment in question was made to the HUF. The shares were heldby the Karta of the HUF. It is in this context that the SupremeCourt came to the conclusion that HUF was the beneficialshareholder. 5.2.In the instant case, however, both the registered andbeneficial shareholders are two individuals and not theassessee-company. Therefore, in our view, the judgment of theSupreme Court does not rule on the issue which has come up forconsideration in the instant matter. 6.Accordingly, in so far as Questions Nos.3 and 4 areconcerned, we find that no interference is called for with theview taken by the Tribunal via the impugned order. In thesecircumstances, the Revenue's appeal, i.e. T.C. (A) No.105 of2017, pertaining to AY 2007-08, with regard to the saidquestions, is dismissed. 7.The Tax Case Appeals are, accordingly, dismissed. Thereshall be, however, no order as to costs. Sd/- Assistant Registrar //True Copy// Sub Assistant RegistrarsraTo1.The Asst. Registrar, Income Tax Appellate Tribunal Madras 'D' Bench, Chennai.2.The Commissioner of Income-tax (Appeals) – II, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034.3.The Asst. Commissioner of Income Tax Company Circle II(1), Chennai.+1cc to Mr.T.R. Senthil Kumar, Advocate, S.R.No.18879+1cc to Mr.S. Sridhar, Advocate, S.R.No.19317nri(CO)md(12/04/2017)T.C. (A) Nos.105 and 106 of 2017